Question

Miles receives $6,000 from his parents. He wants to buy an used car that costs $12,500. If

he invests the money from his parents into an account that pays 7.5% interest compounded
continuously, how long will it take before he has a enough money to buy the car? Round your
answer to the nearest year.

Answer 1

10 years is the correct answer to the question

Answer 2

10 years

Explanation:

principal = 6000

int = 7.5% annual compounding CONTINUOUSLY = everyday

so every day of the year he gets 7.5% / 365

so annual effective rate =7.7876%

so to get to 12500 it'll take t years

12500 = 6000* (1+ 7.7876% )^t

2.0833=1.077876^t

solve for t

approximately 10 years